Bankruptcy specialists prepare for boom as economic headwinds hit UK firms
Corporate restructuring specialists Begbies Traynor and FRP Advisory are expecting a boom in demand for their services in the oncoming economic slump.
The advisory businesses are expecting to profit from a surge in insolvencies as worsening economic headwinds start sinking more UK firms.
Begbies Traynor’s executive chairman Ric Traynor told City PM the consultancy stands ready to capitalise on the highest levels of insolvency activity for “over ten years”.
“We expect continued growth from business recovery and financial advisory, given its increased order book, higher level of enquiries and increasing economic headwinds,” Traynor said.
He argued the recession will also offer Begbies Traynor an opportunity to snap up smaller rivals, as it pushes ahead with efforts to become a “bigger fish” in the small and medium-sized enterprise (SME) insolvency pond.
Traynor said the Manchester headquartered consultancy is not seeking to compete with the Big Four accounting firms but is instead aiming to become “dominant” in its own small pond, in carrying out the work the world’s largest professional services firms are “not geared up to do”.
FRP Advisory put forward similarly optimistic statements as company chief executive Geoff Rowley said the firm’s “restructuring team is well positioned to service the expected increase in demand stemming from the many challenges faced by UK businesses”.
“Uncertainties persist over how long the available liquidity and government backed loans can sustain troubled businesses and how proactive key creditors like HMRC and institutional lenders will be on addressing over-due debts,” Rowley said.
The forecasts come as Begbies Traynor today posted a 12 per cent uptick in its revenues to £58.5m over the six months ending on 31 October 2022, following a series of high-profile appointments including form Park Lane casino operator Silverbond Enterprises and Worcester Rugby Club.
FRP Advisory also saw its revenues jump 24.5 per cent to £49.4m in the six months ending in October, as the firm completed 50 transactions worth £1.28bn.
Yet despite the strong results, shares in Begbies Traynor fell 5.31 per cent in trading today, as shares in FRP Advisory also fell 4.22 per cent.
Traynor blamed “retail investors” expecting “bumper results” for the drop in Begbies’ share price, as he warned the uptick will instead be spread out over a longer period of around three years. “Be patient and you’ll get your rewards,” Traynor said.